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Petroleum Products To Remain Outside GST Regime; Food Delivery Apps to Collect & Deposit GST

Petroleum products will continue to remain outside the ambit of GST regime as many states have opposed the idea of bringing them under the GST regime. Food Delivery App to collect and deposit the 5 per cent GST effective 01 January 2022 instead of the restaurant and several more decisions taken on Friday by the GST Council

Photo Credit : Shuttershock

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A number of key announcements were made at the end of the 45th meeting of the GST Council held in Lucknow on September 17, 2021. The Goods and Services Tax (GST) Council decided to keep petrol, diesel, and all kind of fuels outside the GST regime, said Finance minister Nirmala Sitharaman after the meeting. 

Sitharaman, who chaired the first physical meeting of the Council in nearly two years, said a discussion on including petroleum products in the GST regime was purely at the behest of the Kerala High Court order. “The Council members spoke very clearly that they don’t want petroleum products to be included in GST at this time. We shall report the same to the Court that the Council has discussed it as per their desire and the GST Council felt this wasn’t the time to bring petroleum products into GST,” Sitharaman said.

Santosh Dalvi, Partner and Deputy Head - Indirect Tax, KPMG in India termed the decision to defer the inclusion of petroleum products within the GST ambit as one that will "affect petroleum industry and consumers with continual cascading of taxes."

On the decision to extend the period of GST Compensation Cess till March 2026  in order to service borrowed principal and interest, Dalvi of KPMG said: "It will affect sectors suffering from such cess which expected relief after 5 years." 

Reacting to the decision of excluding petroleum products from GST regime, Divakar Vijayasarathy, Founder &  Managing Partner, DVS Advisors LLP said: "The fact that states are not going to accept bringing in petrol and diesel under GST was on expected lines, given the fact that VAT on these products is a major source of revenue for the states."

In another decision, the GST Council decided that the Food delivery apps like Zomato and Swiggy will now collect the five per cent GST from consumers instead of the restaurant from where the orders are picked up. Revenue Secretary Tarun Bajaj clarified that no new taxes were being announced and that the GST collection point was simply being transferred. At present these apps are registered as TCS, or Tax Collected at Source, in GST records.

GST Council also reduced GST on Bio-Diesel supplied to Oil Marketing Companies for blending with diesel from 12 per cent to 5 per cent. This was promptly welcomed by Hardeep Singh Puri, Union Minister for Petroleum and Natural Gas and Housing & Urban Affairs. "This decision will enable a faster transition to green fuels and give an impetus to the biodiesel industry in the country," he said in a Tweet.

Increase in GST Rates

The GST Council announced an increase in the GST rates for a number of products including Ores and concentrates of metals such as iron, copper, aluminum, zinc and few others (GST increased from 5 to 18 per cent); Specified Renewable Energy Devices and parts (GST increased from 5 to 12 per cent); Cartons, boxes, bags, packing containers of paper, etc. (GST increased from 12 per cent to 18 per cent); Waste and scrap of polyurethanes and other plastics (GST increased from 5 to 18 per cent)

All kinds of pens (GST increased from 12 to 18 per cent); Railway parts, locomotives and other goods in Chapter 86 (GST increased from 12 to 18 per cent); Miscellaneous goods of paper like cards, catalogue, printed material (GST increased from 12 to 18 per cent)

Concessions & Exemptions

The Council extended the concessional GST rates on drugs used in COVID-19 treatment till December 31 and exempted certain other medicines, including those used in the treatment of muscular atrophy (and single doses of which cost crores of rupees).


HIGHLIGHTS

Life-saving drugs Zolgensma and Viltepso used in the treatment of Spinal-Muscular Atrophy exempted from GST when imported for personal use

Extension of existing concessional GST rates on certain COVID-19 treatment drugs up to 31st December 2021

GST rates on 7 other medicines recommended by the Department of Pharmaceuticals reduced from 12% to 5% till 31st December 2021

GST rate on Keytruda medicine for the treatment of cancer reduced from 12% to 5%

GST rates on Retro fitment kits for vehicles used by persons with special abilities reduced to 5%

GST rates on Fortified Rice kernels for schemes like ICDS reduced from 18% to 5%


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